Shared understanding

Different types of teams need to share an understanding of different things.

Leadership teams

The team has a shared vision and collective purpose which they support, and confidence they have made the right strategic bets to achieve success.

Value and metrics

Value and metrics mean different things to different types of teams.

Leadership teams

The group is clear on their unique value proposition for growing the business and they can measure the intended impact. Success is defined, and measures identified.

AND I NEED THIS... WHY?

Traditional quarterly goals suck. You shelve them for most of the quarter while you get on with your "real work", then do a mad scramble at the end to sort-of-kind-of meet them. Or you reverse engineer meaningless goals so they align with meaningless metrics mandated from on high.

If you're as scarred as we are, it's time to try quarterly objectives and key results (OKRs).

With OKRs, you set goals so ambitious that you have almost no chance of actually meeting them by the end of the quarter. But that's ok! Because here's the thing: when we commit to a stretch goal, we end up achieving more than if we'd set a "safe" goal. As the saying goes, if you shoot for the stars, you'll at least land on a mountain top.

So pull on your big-kid pants, step out of your comfort zone, and get ambitious with OKRs.

PREP

Understanding OKRs (30 min)

Before the OKR setting session, make sure the team understands the terminology.

Objectives – A qualitative, far-reaching statement of what you're trying to achieve.

Key results – A quantitative, measurable outcome that states the impact you'll have in reaching your objective.

Scores – A sliding scale between 0 and 1 that indicates whether you missed, came close to, or hit your stated target for the KR. For example:

.3 = you missed the mark by quite a lot .7 = you didn't hit your target, but made great progress 1 = you hit your stretch target (awwwww yeah...)

That's right: scoring .7 on a key result is considered a success! You should set crazy stretch goals and not feel like a failure if you end the quarter without a perfect score.

STEP 1

Setting OKRs: set the stage (5 min)

Re-introduce your team to the terminology and scoring system above. Remind them that OKRs are supposed to be "uncomfortable". They won't be fired for setting an ambitious goal and missing it.

Does the whole concept make your team nervous? Good.

That means you're outside your comfort zone – the only place real growth can happen!

Pro tip

Here's your OKRs cheat-sheet checklist:

Put the customer first

Don’t skimp on ambition

Tie OKRs to larger company goals

Just enough Os and KRs is enough

If you can't measure it, it’s not a good KR

KRs are outcomes – not tasks

Assign KR owners

STEP 2

Setting OKRs: choose your objectives (30 min)

Pose the question "What are the most important impacts we need to make in the coming quarter?"

Spend a few minutes brainstorming ideas on sticky notes and posting them on a whiteboard or wall. Group similar ideas together. From there, distill your ideas down into 3 to 5 aspirational objectives.

Objectives should be high-level, qualitative statements that are aspirational – not tasks or granular outcomes.

STEP 3

Setting OKRs: identify your key results (60 mins)

How do you measure progress toward a qualitative goal that is inherently un-measurable? You identify measurable outcomes that indicate you've achieved your objective.

For each objective, think about the results you would see (and can measure) if you reached it. Again, these are not tasks. These are results.

Wrong: "Ship feature X by the end of the quarter."Right: "Shipping feature X increases new user sign-ups by 10% this quarter."

Assign each KR an owner on the team. If a KR will require collaboration with another team, great! Follow up with them afterwards and make sure they're on board.

ANTI-PATTERN

Your key results are just a glorified to-do list.

Focus on outcomes (not outputs of effort) that speak to business or customer value.

STEP 4

Setting OKRs: amp up your ambition (15 min)

Review the objectives and key results you've built out and ask whether they're ambitious enough. If you feel totally confident you can hit a KR, increase the target by ~30% and create a plan to try and hit it. If you're not at all sure you'll hit a KR's target, it's probably set just right.

Make sure the KRs are articulated such that they can be scored on a sliding scale. Hard numbers and percentages work great here.

Also consider whether you have too many or too few Os and KRs. We've found that for a single team of 7-9 people, three objectives with 2-3 ambitious key results each is about right.

STEP 5

Setting OKRs: agree on next steps (10 mins)

Whew! Big session! Ask your team if there are any loose ends to tie up before you go into execution mode. Any placeholder numbers to firm up? Objectives you should share with other teams? Or people from other teams to recruit as co-owners of a KR?

If you end this session with a lot of open questions, that's ok. Schedule a follow-up session in a few days and task each KR owner with the task to update their KRs prior to the session, so you that session with your OKRs baked and blessed.

STEP 6

Scoring OKRs: monthly checkpoints (30 min)

At the end of each month, check in on how you're tracking on your OKRs and give each key result a predicted end-of-quarter score. I.e., if you predict you'll end the quarter with a score of .7 on a KR, then that's your score for this month.

For example, let's say your stretch KR is "a 10% increase in new user sign-ups this quarter". Here's how you'd score it based on how you're tracking:

if you're tracking toward an 7% increase, you'd predict a score of 0.7 if you're tracking toward an 10% increase, you'd predict a score of 1.0

Include a bit of commentary as to how you came to that prediction and/or why it's changed since last month.

Take the average score for all KRs to get your score for the corresponding objective.

Remember the idea behind scoring at regular intervals is to catch warning signs early and course-correct. This is not an exercise in arse-covering or justification. Most importantly, low-scoring OKRs are not punishable. Learn from them, and feed that wisdom into the coming month or next quarter's OKRs.

FOR EXAMPLE...

Your friendly neighborhood Team Playbook team tracks OKRs on a Confluence page. Like so:

Nailed it?

Variations

LEADERSHIP TEAMS

OKRs work superbly for leadership teams, particularly when building out strategic plans. Adjust the time horizon from quarterly to yearly, and remember to not skimp on ambition.

MULTI-SESSION OKR SETTING

Hold a 30 minute session to choose objectives, as described above, and assign an owner to each one. Objective owners then engage their team and stakeholders to build out the key results. This works well if you need do some research before nailing down your KRs, or if your leadership team sets departmental objectives and supports individual teams to figure out the KRs they'll contribute.

OFFSITE TO GET IT RIGHT

Extend this play to be a major component of your team's next planning offsite.

CHANGE THE TIME HORIZON

Running a quarterly cadence might not hit the right notes for your team, perhaps a more frequent cadence is necessary. Or perhaps you've changed strategic direction mid quarter, no worries. Tweak the time horizon as you need and don't fall into a default.

Follow-ups

Get the calendars organised early – Put time on the calendar for monthly scoring sessions, or set reminders for each owner to score their KRs. And schedule next quarter's OKR setting session well in advance.

Do it all again – At the end of the quarter re-set the clock and do it all again, taking on-board lessons from the current quarter.